Since it was first introduced back in the 1990s, smartphone technology has advanced to the point where these devices can be used for a range of work and leisure functions. This progress has been driven by investment and it is that influx of money that ensures the manufacturers continue to develop innovative new models and features. However even with its established status, some are questioning whether the smartphone industry will continue to be a solid investment in the future.
Is 5G the future?
The tech industry is certain to stay popular with investors this year, but will smartphones be a part of that? Well if they are it is likely to be because of the development of 5G. This wireless tech has the potential to revitalise a market that has seemed to be slowing down after several years of astonishing growth. A study that was published by Ericsson indicated that 5G could present telecommunications companies with the opportunity to earn profits of around $619 billion over the next half decade. Furthermore, another study that was published a year ago by Counterpoint revealed that the market for smart feature phones could reach revenues of $28 billion between now and 2023. These are sums that will have investors champing at the bit to get a piece of them, but the situation is not quite as clear cut as that.
While those reports highlighted the potential profits that 5G and smart feature phones could unleash, the situation within the smartphone sector in the near-term is a bit less rosy. 2019 was a tricky year for this industry, with profit dips for smartphone chip provider Qualcomm and disappointing sales of new high-end models like the Galaxy S10 from Samsung. Throw in a 30% smartphone revenue drop for Sony and a 21% one for LG and suddenly things look different. Even the potential for 5G is imperilled by the battle between the US and China about security concerns.
Where investment might work
This conflicting information makes it difficult for an investor to know whether the industry has peaked or is just in transition, but there is evidence that outside of the US the latter is true. Investors should look to emerging smartphone markets in countries like India, Brazil or Asia where there is likely to be real growth over the next few years. Furthermore, if they want a specific area of the industry that is ripe for investment they should look no further than apps. During the next four years, the market for smartphone apps is expected to enjoy 24% growth, making it an area of the mobile industry well worth putting money into in 2020. Although the smartphone and mobile industry has experienced a couple of more difficult years, following several where growth was extraordinary, it is far from being dead. From the development of 5G, which will be another game-changer, to the emergence of brand new markets, the smartphone industry remains a strong investment.